February 4th, 2009

Intellectual property and the U.S. auto industry

Posted in  Intellectual Property 
Author: Tom Giovanetti || Location: Lewisville, Texas, USA

There's an op/ed in today's Washington Times about intellectual property and the U.S. auto industry. Which doesn't seem terribly interesting, even to someone like me who is interested in intellectual property.

Except that there is a terribly important point in the piece regarding IP and "green tech." Namely, that there is an emerging international argument that "green tech" technologies are too compelling to allow them to be covered by patents in the traditional sense, because, in their philosophy, that locks the knowledge away from the developing countries most in need of this critical "tech transfer."

Government action is also needed to head off a newer threat to automotive innovation - the growing number of foreign governments and NGOs determined to weaken intellectual property rights in areas like energy efficiency and environmental technology, citing the current patent system as a "barrier to technology transfer."

Like I said.

You may recall that, for the last several years, we've dealt with this issue of compulsory licensing for pharmaceuticals. The argument has been that certain pharmaceuticals are just so compelling that, if a country can't come to a purchase agreement with a particular manufacturer for a particular drug, the country can file a compulsory license on that drug and essentially take the patent and manufacture the drug themselves or contract with someone else to make the drug for them.

Compulsory licensing was intended for certain specific uses such has health emergencies where adequate access to a drug could not happen for some reason, such as a pandemic where sufficient quantities of a drug simply weren't available. Those were the terms which the U.S. and other governments agreed to in negotiating the relevant treaty. But, of course, what compulsory licensing has become is the ultimate negotiating weapon for poor countries. "If you won't give me an absolutely absurdly low price, I'll just take your patent."

We've been bracing ourselves for the same logic on green technologies. First, establish a crisis in the form of global warming. Then, of course, any technologies that claim to help mitigate the crisis are so compelling that the technology simply must be transferred across the globe to developing countries without letting patents get in the way. This is coming.

Which is tragic, of course, because if inventors and companies can't depend on the patent system to allow them to profit from their R&D and innovation, they won't innovate (at least as much as they otherwise would). And we will all lose.

Those who argue against patents inevitably are disingenuous about the innovation of the patent system itself. The true genius of the patent system is that, in exchange for your temporary market power, you MUST disclose your invention. In other words, a patent does NOT lock knowledge away. In fact, patents are the ultimate tools for technology transfer. Everyone gains immediate access to the knowledge--they just don't get to copy the invention. They can build on it, they can improve it, but they cannot immediately copy it.

Opponents of patents fail to understand that the opposite of patents isn't "public knowledge." The oppose of patents is trade secrets, in which the knowledge truly is locked away from the public. Patents are the ultimate tech transfer tools, whereas trade secrets are the true opponents of tech transfer.